Bitcoin and Cryptocurrency Technologies

Figure 1.10 GoofyCoin ​coin. ​Shown here is a coin that’s been created (bottom) and spent twice
(middle and top).
To summarize, the rules of GoofyCoin are:
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Goofy can create new coins by simply signing a statement that he’s making a new coin with a
unique coin ID.
Whoever owns a coin can pass it on to someone else by signing a statement that saying, “Pass
on this coin to X” (where X is specified as a public key)
Anyone can verify the validity of a coin by following the chain of hash pointers back to its
creation by Goofy, verifying all of the signatures along the way.
Of course, there’s a fundamental security problem with GoofyCoin. Let’s say Alice passed her coin on
to Bob by sending her signed statement to Bob but didn’t tell anyone else. She could create another
signed statement that pays the very same coin to Chuck. To Chuck, it would appear that it is perfectly
valid transaction, and now he’s the owner of the coin. Bob and Chuck would both have valid‐looking
claims to be the owner of this coin. This is called a double‐spending attack — Alice is spending the
same coin twice. Intuitively, we know coins are not supposed to work that way.
In fact, double‐spending attacks are one of the key problems that any cryptocurrency has to solve.
GoofyCoin does not solve the double‐spending attack and therefore it’s not secure. GoofyCoin is
simple, and its mechanism for transferring coins is actually very similar to Bitcoin, but because it is
insecure it won’t cut it as a cryptocurrency.
ScroogeCoin
To solve the double‐spending problem, we’ll design another cryptocurrency, which we’ll call
ScroogeCoin. ScroogeCoin is built off of GoofyCoin, but it’s a bit more complicated in terms of data
structures.
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